- The Washington Times - Friday, September 1, 2006


A hiring revival pulled down the nation’s unemployment rate to 4.7 percent last month and flashed a Labor Day weekend message that the slowing economy isn’t in danger of fizzling out.

The latest snapshot, released by the Labor Department yesterday, was brighter than expected and eased some fears that the economy — weighed down by a housing slump — might tip into recession.

“This provides some peace of mind,” said Oscar Gonzalez, economist at John Hancock Financial Services.

Employers boosted payrolls by 128,000 in August, an improvement over the 121,000 jobs created in July. Schools, hospitals, financial firms, computer-design shops and construction companies were among those posting employment gains last month. That helped to blunt job cuts in manufacturing, retailing, trucking and elsewhere.

On Wall Street, the employment news lifted stocks. The Dow Jones Industrial Average gained 83 points to close at 11,464.

Broader stock indicators also posted gains. The Standard & Poor’s 500 Index gained seven points, or 0.55 percent, rising to 1,311, and the Nasdaq Composite Index rose nine, or 0.43 percent, to 2,193.

Bonds were little changed, with the yield on the benchmark 10-year Treasury note closing flat at 4.73 percent from late Thursday. The dollar was mixed against other major currencies, while gold prices fell.

With hiring improving, the unemployment rate dropped a notch from a five-month high of 4.8 percent in July. That decline put the current unemployment rate close to a five-year low of 4.6 percent reached in May and maintained in June.

The jobless rates for blacks in August dipped to 8.8 percent, the lowest since July 2001. The unemployment rate for Hispanics held steady at 5.3 percent.

Although economists pointed to the employment figures as evidence that the economic expansion, which began in late 2001, remains intact, there is an obvious weak spot.

Construction spending plunged in July by the largest margin in nearly five years, the Commerce Department reported, another sign of the cool-down in the once sizzling housing market.

A report from the Institute for Supply Management, meanwhile, showed manufacturing activity in August expanding at a slower but still decent clip than in July. That was consistent with the moderate growth seen in the overall economy.

The latest batch of economic news was released as the nation’s work force prepared to celebrate the Labor Day holiday and as the election season looms.

Economic conditions are likely to be on voters’ minds when they go to the polls in November.

“The economy is a top concern for many voters in America, although there are other salient issues like the war in Iraq and terrorism,” said Costas Panagopoulos, a political science professor at Fordham University. How people vote is shaped by how they are faring economically.

The Bush administration, whose officials filled the airwaves yesterday to tout the president’s economic policies, contends Americans are doing better. Rival Democrats say many are struggling.

Workers’ average hourly earnings edged up to $16.79 in August, a 0.1 percent increase from July.

Given the slowdown in the national economy and in the housing market, the Federal Reserve on Aug. 8 halted a string of interest rate increases that had lasted more than two years.

Economists have mixed opinions about the Fed’s next move on Sept. 20. Many think the central bank will leave rates alone again and said the employment report would justify such a decision. Others predict another rate increase could be in store at that meeting or later this year to keep inflation in check.

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